BIS: Cryptocurrencies are Unsafe and May Vanish Anytime
June 18, 2018
Cryptocurrencies are not scalable and are more likely to suffer a breakdown in trust and efficiency the greater the number of people using them.
This was the prognosis the Bank of International Settlements (BIS) came out with in its latest report dedicated to concerns about crypto market popularity growth.
As the document asserts, money in any form has to have price stability and scalability to be used widely. Cryptocurrencies don’t so they cannot be reliable.
The report also says, digital tokens sometimes experience breakdowns in decentralized networks that tend to have overloads. This may cause commission fees rising and reducing of the number of transactions per second.
“Trust can evaporate at any time because of the fragility of the decentralised consensus through which transactions are recorded,” the Switzerland-based group said in its report. Not only does this call into question the finality of individual payments, it also means that a cryptocurrency can simply stop functioning, resulting in a complete loss of value.”
Another flaw cryptocurrencies have is the very process of mining due to its high cost.
In addition, the report claims the necessity in global regulation for crypto industry by both state-controlled financial institutions and private companies rendering crypto services. The BIS also warned central banks against potential risks of establishing state digital currencies.
Note that the company’s CEO Agustin Carstens called Bitcoin “a combination of a bubble, a Ponzi scheme and an environmental disaster”.